Scottish baby boomers see home equity rise £250 each month as UK over-65s bank £1.1tn of property wealth

Over-55s financial specialist Key Retirement found that Scots with a paid-off mortgage saw the value of their property increase by an average of £2,986 in the 12 months between November 2016 and the same month last year.

Property equity in the 282,000 homes owned outright by Scots aged 65+, as of November 2017, stood at £41.169 billion, meaning Scottish “baby boomers” enjoyed record £842 million growth in the past year.

The percentage of total value of property equity belonging to people aged 65+ in Scotland now stands at 3.75 per cent.

But while soaring housing values are good news for those who have paid off their mortgages, analysts are warning that the ever-increasing cost of getting on the property ladder and a lack of housing stock for people wanting to downsize is causing the market to stagnate.

Ruth Highgate, associate planner at Savills in Glasgow, said: “Many older Scots are stuck in a housing trap. The housing market does not fully meet the demands from older people to downsize into suitable retirement accommodation.

“There are a number of challenges facing the Scottish retirement living sector, including relatively high land prices in Scotland compared to other parts of the UK and an inconsistent approach to planning across Scottish local authorities.”

“However, with a growing older population who have a pressing housing need and equity to invest, not only is there a commercial opportunity, but a corporate responsibility for the planning and development sector to address this important market in Scotland.”

In the UK as a whole, the total property wealth owned by over-65s who have paid off their mortgages is near a record high of more than £1.101 trillion after growing £37 billion in the past year, Key’s Pensioner Property Equity Index revealed.

Owning a home outright has been worth nearly £660 a month on average for UK retired homeowners.

Over-65s in the South East and East Anglia have been the biggest winners with gains of more than £1,000 a month while retired homeowners in the West Midlands have made £960 a month.

The long-term value of home ownership is underlined by Key’s index - since the group started analysing over-65s housing wealth in 2010 retired homeowners have seen growth of 41 per cent or £321 billion which is worth around £68,500 on average for every over-65 homeowner.

The strength of the housing market means property wealth is making a major contribution to retirement standards of living as the equity release market expands with customers releasing an average £77,380 of property wealth and nearly £134,000 in London and £91,000 in the South East.

Dean Mirfin, chief product officer at Key Retirement, said: “The long-term strength of the housing market is delivering for retired homeowners who have made around £7,900 in the past year.

“Total property wealth of more than £1 trillion means pensioners who have paid off mortgages can rely on using their homes to generate tax-free returns no matter what happens in the short and medium term.

“The average homeowner is releasing through equity release the equivalent of the gains made since 2010 and property wealth is having a dramatic effect on the standards of retirement living for many thousands across the UK.”

The table below shows the detailed picture across Great Britain – the only area to see a drop is London but homeowners in the city still own £176.38 billion of property wealth.